In a significant move to strengthen anti-money laundering (AML) frameworks within the virtual asset sector, the Financial Supervisory Commission (FSC) has announced two key draft regulations. These are the "Draft Regulations for Anti-Money Laundering Registration of Virtual Asset Service Providers or Personnel" and amendments to the "Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Regulations for Virtual Currency Platforms and Trading Business Enterprises."
This development follows the amendment of the Anti-Money Laundering Act on July 31, 2024, which introduced a new registration system for Virtual Asset Service Providers (VASPs). The upcoming regulations provide the detailed framework for implementing this system, ensuring a more secure and compliant operational environment for all market participants.
Overview of the Draft VASP Registration Regulations
The "Draft Regulations for Anti-Money Laundering Registration of Virtual Asset Service Providers or Personnel" (VASP Registration Regulations) establishes a comprehensive registration and oversight regime. Comprising 31 articles, its key provisions are outlined below.
Business Categories and Segmented Registration System
VASPs must register according to their specific business activity. The regulation defines five distinct categories:
- Virtual Asset Exchange: Businesses facilitating the exchange between virtual assets and fiat currencies or between different virtual assets.
- Trading Platform: Operators of platforms that facilitate the trading of virtual assets.
- Transfer Service Provider: Entities engaged in the transfer of virtual assets.
- Custodian: Businesses providing safekeeping and/or administration of virtual assets or instruments enabling control over them.
- Underwriter: Entities involved in the offering and sale of virtual assets.
Each category requires a separate AML registration.
Registration Conditions and Procedures
The draft sets clear requirements for obtaining registration:
- Eligibility Checks: Stipulates negative qualification conditions for responsible persons and ultimate beneficial owners (UBOs).
- Application Process: Details the necessary documentation and procedures for submitting a registration application.
- Operational Timelines: Defines the timeframe within which a VASP must commence operations after registration and the proper procedures for terminating business activities.
- Compliance Oversight: Outlines grounds for refusing an application and for revoking or abolishing an existing registration.
- Change Management: Establishes the procedure for reporting any changes to the information submitted in the original application.
Operational Management and Compliance
Registered VASPs will be subject to stringent operational requirements, including:
- General compliance obligations such as adhering to all relevant laws, maintaining fiat currency reserves, and ensuring robust information system security.
- Establishing effective customer complaint handling mechanisms.
- Mandatory information disclosure and public announcements.
- Comprehensive record-keeping protocols.
- Specific rules tailored to each business category (e.g., exchange, platform, custodian) to address their unique risks.
Transitional Arrangements
A crucial aspect of the draft is the transition from the old system to the new. Virtual asset service providers that have already completed a compliance declaration under the previous Anti-Money Laundering Act must apply for registration under this new system within three months of its effective date. A grace period of nine months from the enactment of these regulations is provided to complete the registration process successfully.
Key Amendments to the AML/CFT Regulations
Concurrently, the FSC is amending the existing "AML/CFT Regulations for Virtual Currency Platforms and Trading Business Enterprises" to align with the new registration regime.
- Updated Nomenclature and Scope: The amended regulations will be renamed the "Anti-Money Laundering and Countering the Financing of Terrorism Regulations for Virtual Asset Service Providers or Personnel." Their application will be explicitly limited to entities that have successfully completed registration under the new VASP Registration Regulations.
- Enhanced Risk Assessment: VASPs will be required to prepare an annual risk assessment report and submit it to the FSC, promoting ongoing vigilance and a risk-based approach.
- Strengthened Internal Controls: A new provision mandates that VASPs establish robust internal control and audit systems. These systems must comply with the Anti-Money Laundering Act, the Counter-Terrorism Financing Act, the VASP Registration Regulations, and any relevant self-regulatory organization rules.
- Streamlined Compliance: The previous requirement for VASPs to file a compliance declaration will be formally abolished, as this function is superseded by the new registration system.
Implications for the Industry
The introduction of this mandatory registration system represents a maturation of the regulatory landscape for virtual assets. It aims to enhance market integrity, protect investors, and align Taiwan's framework with international standards set by the Financial Action Task Force (FATF).
For existing and prospective VASPs, careful attention to the transitional timeline is critical. The FSC has explicitly advised that any entity planning to enter this sector should consider waiting until the new registration system is officially生效 before applying. This avoids the complication and redundancy of having to submit applications under two different regulatory regimes in a short period.
The official draft regulations and a detailed comparison of the amended articles will be published on the FSC’s website. The commission is inviting all stakeholders to provide feedback and comments during the 30-day public consultation period following the official announcement.
👉 Explore the official regulatory announcement and details
Frequently Asked Questions
What is the purpose of these new draft regulations?
The primary goal is to establish a clear and mandatory registration system for all Virtual Asset Service Providers (VASPs) operating in the region. This strengthens the anti-money laundering (AML) and counter-financing of terrorism (CFT) framework, enhancing oversight, consumer protection, and overall market security.
Who needs to register under the new VASP Registration Regulations?
Any business or individual providing services like virtual asset exchanges, operating trading platforms, facilitating transfers, offering custody solutions, or underwriting virtual asset offerings must register. The regulations require separate registration for each distinct business category.
What is the deadline for existing VASPs to register?
VASPs that have already completed a compliance declaration under the old rules must apply for registration within three months of the new system taking effect. They will then have a total of nine months from the date the regulations are enacted to complete the entire registration process successfully.
How do the amended AML/CFT regulations differ from the previous version?
Key changes include limiting the scope of the regulations to only those entities registered under the new system, introducing an annual risk assessment reporting requirement, mandating stronger internal controls, and formally removing the obsolete compliance declaration requirement.
What should a new company wanting to become a VASP do?
The FSC advises new market entrants to wait until the new registration system is officially in effect before submitting their application. This streamlines the process and prevents the need to comply with outdated application procedures that will soon be replaced.
Where can I find the full draft documents to review?
The complete draft regulations, including a comprehensive overview and a line-by-line comparison of amendments, will be made available on the Financial Supervisory Commission's (FSC) official website for public review and comment.